The news from Davos that President Trump will “ask Saudi Arabia and Opec to bring down the cost of oil” is certainly in keeping with his desire for lower gasoline prices and his clear intention to use energy as leverage over Russia to end the war in …
23rd January 2025
Although developed market (DM) equities outside the US have purportedly benefited from bargain hunting recently, we doubt they will outperform their counterparts in the US over the course of 2025 as a whole. MSCI’s World ex USA Index of DM equities has …
Renewed rises in market interest rates across the UK, US and euro-zone have prompted questions about the implications for real estate. For now, we think the upside risk to property yields is small. We still anticipate government bond yields to fall back …
Saudi-US relations already on a stronger footing Over the past year, Saudi Arabia’s shift toward China appears to have been on pause as it awaited to see the victor of the US presidential race. With Donald Trump now back in the White House, there are …
Join Chief Global Economist Jennifer McKeown and senior economists from our US, Europe and UK teams for this online briefing all about the first rate decisions of 2025 from the Federal Reserve, European Central Bank and the Bank of England. During this …
When central bankers give guidance on likely interest rates changes in the next month or two, it’s probably best to believe them. But experience shows that banks’ own interest rate forecasts are very unreliable beyond three to six months in the future. …
We held an online briefing yesterday on Mexico’s economy and how it may be impacted by the Trump administration. (Listen to the on-demand recording here .) This Update answers some the key questions that came up. How do you interpret the threatened 25% …
25bp rate cut very likely next week. We expect ECB to lower interest rates further this year than investors anticipate. US trade policy likely to have little impact on euro-zone inflation and monetary policy. The ECB looks set to cut its deposit rate …
Heading for another strong quarter On the surface, the 0.4% decline in retail sales volumes in November looks worrying, but that fall partly reflects households delaying purchases ahead of the December GST holiday. Encouragingly, November’s drop appears …
The declaration of a National Energy Emergency underlines President Trump’s aspiration to extend the US’s dominance in global energy markets, and his willingness to use the US’s clout as leverage will reshape global energy flows during his term. That …
Easing inflation makes February cut highly likely The fall in Mexican inflation in the first half of January, to 3.8% y/y, means that Banxico is likely to continue its easing cycle next month. But with the Fed set to pause its pause its cutting cycle and …
250bp cut likely to be follow with another in March The 250bp interest rate cut by Turkey’s central bank (CBRT), to 47.50%, was accompanied by cautious language in the statement. But given signs that underlying inflation pressures are easing , we think …
Our analysis suggests that most of the recent rise in the household saving rate can be attributed to cyclical rather than structural factors, which means the saving rate will slowly fall as interest rates decline. That lends support to our view that …
Today’s policy announcement confirms that Norges Bank is likely to start cutting interest rates at its meeting in March, almost certainly with a 25bp reduction to 4.25%. We think it will then loosen monetary policy a little more quickly than its latest …
Norges Bank to start cutting in March Today’s policy announcement confirms that Norges Bank is likely to start cutting interest rates at its meeting in March. We think it will then loosen monetary policy a little more quickly than its latest projections …
President Trump’s threats to retake ownership of the Panama Canal reflects its importance for US trade and the country’s strategic interests. It’s possible that these threats are simply another attempt to gain concessions, such as lower fees charged to …
Korea’s economy continued to struggle in Q4 and we suspect that the weakness in activity could persist in the near term due to the ongoing political crisis and the bleak outlook for the construction sector. Data released today show that GDP growth …
22nd January 2025
Recent upside surprises to activity and core inflation could justify a pause However, with tariffs hanging over the economy, Bank will opt for a 25bp cut Bank set to call time on QT this year The recent pick-up in GDP growth and core inflation pressures …
Donald Trump’s ringing endorsement of Stargate is another shot in the arm for Artificial Intelligence (AI) in the early days of his second presidency, and supports our long-standing view that the S&P 500 will thrive in 2025 amid growing investment in, and …
Solid activity data support case for a pause Mildly stagflationary Trump policies imply maximum of two more rate cuts this year Annual voting rotation won’t affect policy outlook We expect the strength of the economy and uncertainty over immigration and …
China’s surging exports have been gaining international attention, but concerns about overcapacity have focussed on “strategic sectors”. Far less acknowledged is the fact that China has been gaining significant global export market share across the board, …
The rise in gilt yields since the start of the year will weigh on transactions and put upward pressure on property yields over the next couple of months. But we still think risk-free interest rates will fall back later this year, which will help property …
After a stellar run, India’s economy has entered a softer patch that will continue for a few more quarters. We think that will portend an underperformance in local equities relative to other major benchmarks. Headline CPI inflation has fallen back within …
We are pessimistic about the outlook for most emerging market assets in 2025, due to the effects of Donald Trump’s agenda, slowing Chinese activity, subdued commodity prices, and domestic challenges. Trump’s first day in office proved a decent one for …
Headline inflation in Asia has continued to ease over the past year and is now back to (or below) target everywhere. We expect inflation to remain subdued over the coming year as improved growing conditions help keep a lid on food prices and below-trend …
South Africa’s activity data for November points to a strong end to last year, underpinned by the mining and retail sectors. We think GDP will expand by an above-consensus 2.3% in 2025. The retail sales data released today showed that the sector continued …
Egypt’s economy has struggled over the past year due to the effects of a weak pound, high inflation, and tighter fiscal and monetary policy, but there have been signs recently that a recovery is taking hold. We expect GDP growth will strengthen, and by …
We think Trump’s trade policies will weigh on equity returns outside of the US, making 2025 a year of muted returns for emerging market (EM) equities. But we think it will still be a decent year for stocks in other developed markets (DMs). (See Charts 1 & …
The underperformance of the German office-based jobs sector since 2019 has been stark and the weak outlook for the economy suggests a material reversal is unlikely in the next five years. This will hold back office demand compared to the other main …
Hopes that Finance Minister Nirmala Sitharaman will deliver a big fiscal package to get the economy out of its recent soft patch in the upcoming Union Budget are likely to be disappointed. Some more accommodative tax and spending measures are on the …
Inflation edges up but SARB to continue with cuts in 2025 The smaller-than-expected rise in South Africa’s headline inflation rate, to 3.0% y/y, in November, combined with the recent recovery in the rand, supports our view that the SARB can continue with …
Rates on hold (again), prolonged hold likely Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and hinted that it was in no hurry to change rates anytime soon. The decision comes as no surprise – the outcome was correctly …
This page has been updated with additional analysis since first publication. Figures not as bad as they appear but challenges remain Against a backdrop of slowing GDP growth and high interest rates, December’s overshoot in borrowing is further …
We suspect that a Coalition government would run slightly tighter fiscal policy than Labor, which in turn may encourage the Reserve Bank of Australia to loosen monetary policy a bit more aggressively than we’re anticipating. But while we expect the …
This page has been updated with additional analysis since first publication. With price pressures continuing to abate, the RBNZ should have no qualms about cutting rates by another 50bp at its meeting next month. The 0.5% q/q rise in consumer prices last …
21st January 2025
President Donald Trump for now at least appears to be in favour of the H-1B visa scheme, a key route for Indians to work in the US tech sector, but the scheme is a key source of friction among his supporters. If restrictions around H-1B visas are …
The “America First Trade Policy” White House memorandum makes it clear that tariffs are coming, although we still have little clarity on the timing. There are some signs that a universal tariff could come later than in the second quarter as we have …
Contradictory signals around the Trump administration’s plans for tariffs are an early indication that, at least in some ways, Trump’s second term will probably resemble the first. To recap, yesterday saw a sharp sell-off in the US dollar after reports …
The economy continues to do well with GDP growing strongly, employment growth solid and core inflation pressures easing again. We are concerned, however, that the Trump administration’s policies will weigh on GDP growth over the course of this year. …
Developments over the past year have put France’s public debt on a steeper upward path, with the debt ratio now likely to rise from 113% of GDP last year to around 126% by 2030. We see little chance of a sustained fiscal consolidation in the coming years …
The precarious nature of the outlook for the Federal budget deficit is well appreciated at this stage, but arguably the bigger long-term risk is the mounting current account deficit . With the primary income balance no longer in surplus and the dollar …
Concerning signs despite GST-related fall in headline inflation The small fall in headline inflation to 1.8% in December is not as encouraging as it looks, with the details suggesting that a higher proportion of the GST holiday was captured by the price …
With the RBA striking a more dovish tone in recent weeks, speculation has grown rampant that the Bank could begin its easing cycle as soon as its next meeting in February. We still think there's a compelling case for the Bank to hold its fire until later …
Vietnam could take a number of measures to reduce its huge bilateral trade surplus with the US, notably stepping up its purchases of US farm products and clamping down on transshipments from China. But even if these were successful, they would still leave …
This page has been updated with additional analysis since first publication. UK wage growth rebounds further, but there are signs of cooling further ahead While the further rise in regular private sector pay growth in November will cause the Bank of …
We aren’t overly worried about the impact of higher bond yields on Japan’s public finances because rising interest rates are a direct consequence of higher inflation. With the effective interest rate on public debt set to rise only slowly, the net impact …
President Donald Trump returned to the White House today with pen already in hand to sign what is expected to be close to 100 executive orders. That flurry of executive action will set the tone on what we can expect from his administration in a wide range …
20th January 2025
